The footballer, who also used to play for Liverpool, was attacked by six masked robbers while his family slept at the mansion in Cricklewood, north London.
It is reported that Rosenthal was punched in the face after the men “carrying machetes and wearing balaclavas” broke into his mansion at 1am.
Sources told the Mail Online the masked thieves were trying to steal designer watches from Rosenthal’s house and were “in and out in five minutes”.
A neighbour of the former footballer told the London Evening Standard: “He told me that they were physically abused and threatened with machetes and horrible stuff like that.
“The raiders were in and out in five minutes … these people know what they’re doing. The family are fine now, they are a strong family but it wasn’t pleasant.
“All you can do is look at your security and be alert but you just never know. If they get in just give them what they want and let them go.
“We have private security who are brilliant for just £20 a week. There are just too many pressures on the police.”
Rosenthal, who was nicknamed “Rocket Ronny”, joined Liverpool in 1990 after making his name in Israel and helped the club to the First Division title.
But he is known for his infamous miss against Aston Villa during the very first Premier League season, dribbling past the goalkeeper and striking the ball at the crossbar from yards out.
Rosenthal, who also won 60 caps for Israel, joined Tottenham in 1994 and spent three seasons with the club before signing for Watford.
The latest horrifying incident comes after Arsenal player Sead Kolasinac heroically fought off two knife-wielding men after he and team-mate Mesut Ozil were attacked in north London last week.
Of this latest incident believed to involve Rosenthal, a Metropolitan Police spokesman said: “Police are investigating an aggravated burglary in Cricklewood that took place on May 11.
“Officers were called to a residential property at 1.14am to a report of multiple armed intruders forcing their way inside. Various items were stolen before the suspect left the scene. No arrests. Enquiries continue.”